WARNING!!! If you have a question . . . . . .contact your - - PDF document

Conflicts of Interest 2018 Clerks Certification Institute

Norma Houston February 13, 2018

WARNING!!!

If you have a question . . . . . .contact your attorney

• r the SOG!

Ethics In Government

Whose interests do you serve?

Norma Houston UNC School of Government www.sog.unc.edu Page 1

Citizens want public officials who will promote the public interest Not their own personal or financial interest

If people act legally are they also acting ethically? If you can do it, does that mean you should do it?

Ethics vs. Law

Norma Houston UNC School of Government www.sog.unc.edu Page 2

Ethics vs. Law

Who decides when a public official has acted unethically?

Citizens

Ethics vs. Law

Who decides when a public official has acted unethically?

The press

Ethics vs. Law

Who decides when a public official has acted unethically?

The public official

Norma Houston UNC School of Government www.sog.unc.edu Page 3

Ethics vs. Law

Who decides when a public official has acted unethically?

Other public officials

You Have A Choice

You have a choice about how to act; you should evaluate legal and ethical factors in deciding how to act

Deciding How to Act: Two Questions

Is it legal? Is it ethical? Your Decision

Norma Houston UNC School of Government www.sog.unc.edu Page 4

WHAT IS A CONFLICT OF INTEREST? WHAT DO YOU THINK?

When personal interests are in conflict with public interests

What is a Conflict of Interest?

• 1. Yes
• 2. No

Brother’s Business

Can you purchase office supplies for your unit from your brother’s office supply store?

Norma Houston UNC School of Government www.sog.unc.edu Page 5

• 1. Yes
• 2. No

Surplus Property

Can you buy items that are sold at your unit’s surplus property auction?

• 1. Yes
• 2. No

Board Member Contract

Can your unit contract with your board chair’s spouse to perform consulting services?

• 1. Yes
• 2. No

Employee Contract

Can your unit contract with your husband’s company to perform consulting services?

Norma Houston UNC School of Government www.sog.unc.edu Page 6

• 1. Yes
• 2. No

Free Lunch

Can a vendor who is not currently under contract with your unit take you to lunch?

• 1. Yes
• 2. No

Conference Reception

Can you eat and drink at a conference reception sponsored by a vendor under contract with your unit?

• 1. Yes
• 2. No

Employee Appreciation

Can you ask a vendor under contract with your unit to donate biscuits for an employee appreciation breakfast?

Norma Houston UNC School of Government www.sog.unc.edu Page 7

Happy Holidays

• A. Yes
• B. No

Can you enjoy the holiday basket goodies sent to your office by a vendor doing business with your department?

Retiring Member’s iPad

• A. Yes
• B. No

Can your county/city give a retiring commissioner/councilmember her government- issued iPad as a going-away present?

• 1. Yes
• 2. No

Neighbor Contractor

Can you tell your neighbor about a potential bidding opportunity with your unit?

Norma Houston UNC School of Government www.sog.unc.edu Page 8

LEGAL REQUIREMENTS

UNDER STATE LAW

Legal Requirements

Local Governing Board Members:

• Ethics Training
• Local Ethics Codes

All Public Officials & Employees:

• Self-benefiting prohibited
• Gifts and favors

prohibited

• Misuse of confidential

information prohibited

• Other public office
• ffenses (embezzlement,

bribery, etc.)

Sources of Legal Standards

Federal Law State Law Local Code

• f Ethics

Remember the “Most Restrictive Rule”

Norma Houston UNC School of Government www.sog.unc.edu Page 9

Ethics Legal Requirements

• 1. Conflicts of Interest

/ Self Benefiting

Ethics Legal Requirements

• 2. Gifts & Favors

Ethics Legal Requirements

• 3. Insider Trading

Norma Houston UNC School of Government www.sog.unc.edu Page 10

CONFLICTS OF INTEREST IN PUBLIC CONTRACTING

• 1. Self-Benefiting

in Contracting Direct contracting Attempting to Influence Contracting

If you’re involved at any point in the contracting process, you’re involved in “making or administering” the contract

Making or administering a contract

Direct Contracting

G.S. 14-234(a)(1)

Norma Houston UNC School of Government www.sog.unc.edu Page 11

There’s a direct benefit if you or your spouse:

• 1. Own more than 10% of the company,
• 2. Receive income or commission from the

contract, or

• 3. Acquire property under the contract

Direct benefit to you or your spouse Making or administering a contract

Direct Contracting

G.S. 14-234(a)(1)

*Unless an exception applies: banks and utilities, friendly condemnation, spouse employment, public assistance programs, small jurisdictions

Direct benefit to you or your spouse Making or administering a contract Class 1 misdemeanor* & void contract*

Direct Contracting

G.S. 14-234(a)(1)

• 1. Contracts with banks, savings and loans,

public utilities

• 2. “Friendly” condemnation
• 3. Employment of the spouse of a public officer

(local elected & appointed officials only)

• 4. Payment for public assistance programs
• 5. “Small” jurisdictions (local elected &

appointed officials only)

Direct Contracting Exceptions

Norma Houston UNC School of Government www.sog.unc.edu Page 12

City Population under 15,000 City Council

“Small Jurisdiction” Exception (G.S. 14-234(d1))

Direct Contracting

Board of Commissioners Board of Education Mental Health DSS Health County with no city population

• ver 15,000

“Small Jurisdiction” Exception (G.S. 14-234(d1))

Direct Contracting

Only if:

Physician Pharmacist Dentist Optometrist Vet Nurse Board of Commissioners Board of Education Mental Health DSS Health County with no city population

• ver 15,000

Mental Health DSS Health

“Small Jurisdiction” Exception (G.S. 14-234(d1))

Direct Contracting

Norma Houston UNC School of Government www.sog.unc.edu Page 13

“Small Jurisdiction” Exception

G.S. 14-234(d1)

Limits on Scope:

• Total contract amount

must be under $40,000 in a 12-month period ($20,000 for medical services)

• Contracts for purchases
• r construction must be

under $30,000 Procedural Requirements:

• Approved at regular

board meeting

• Declared on annual

audit

• Publically posted
• No participation or

voting by conflicted

• fficial

Doesn’t have to be a contract you make or administer!

No exceptions!

Direct benefit to you or your spouse Attempt to influence Someone involved in making or administering Class 1 misdemeanor

Attempting to Influence Contracting

G.S. 14-234(a)(2)

• 1. Yes
• 2. No

Brother’s Business

Can you purchase office supplies for your unit from your brother’s office supply store?

Norma Houston UNC School of Government www.sog.unc.edu Page 14

• 1. Yes
• 2. No

Surplus Property

Can you buy items that are sold at your unit’s surplus property auction?

• 1. Yes
• 2. No

Board Member Contract

Can your unit contract with your board chair’s spouse to perform consulting services?

• 1. Yes
• 2. No

Employee Contract

Can your unit contract with your husband’s company to perform consulting services?

Norma Houston UNC School of Government www.sog.unc.edu Page 15

GIFTS & FAVORS

• 2. Gifts

& Favors

Gifts from Contractors Gifts for Influencing Contracts

What is a Gift?

“Something voluntarily given by one person to another without compensation.”

• Webster’s Dictionary

Norma Houston UNC School of Government www.sog.unc.edu Page 16

Prohibited Giver: Contractor or vendor who is:

• 1. Past (within 1 year)
• 2. Current
• 3. Potential future

= Class 1 misdemeanor, unless an exception applies

Gifts and Favors from Contractors

G.S. 133-32 Prohibited Recipient: Public officer or employer who:

• 1. Prepares plans or

specifications for public contracts, or

• 2. Awards or administers

public contracts, or

• 3. Inspects or supervises

construction

= Class 1 misdemeanor, unless an exception applies

Gifts and Favors from Contractors

G.S. 133-32 Honoraria

Exceptions:

Honoraria Banquets Souvenirs Professional Organizations Family / Friends

Gifts and Favors from Contractors

G.S. 133-32

Norma Houston UNC School of Government www.sog.unc.edu Page 17

Souvenirs / advertising items of nominal value

Exceptions:

Honoraria Banquets Souvenirs Professional Organizations Family / Friends

Gifts and Favors from Contractors

G.S. 133-32 Meals at banquets

Exceptions:

Honoraria Banquets Souvenirs Professional Organizations Family / Friends

Gifts and Favors from Contractors

G.S. 133-32 Gifts to professional organizations

Exceptions:

Honoraria Banquets Souvenirs Professional Organizations Family / Friends

Gifts and Favors from Contractors

G.S. 133-32

Norma Houston UNC School of Government www.sog.unc.edu Page 18

Non-business customary gifts from friends

• r family (must be reported to agency head)

Exceptions:

Honoraria Banquets Souvenirs Professional Organizations Family / Friends

Gifts and Favors from Contractors

G.S. 133-32

Gifts for Influencing Contracts

G.S. 14-234(a)(3)

Doesn’t have to be a contract you or your spouse benefit from!

No exceptions!

Solicit or receive a gift

• r favor

Attempt to influence Someone involved in making or administering Class 1 misdemeanor

Gift Ban Tip

FOLLOW THE MONEY!

When trying to decide if gift is given by a prohibited giver, identify who is paying for it

Norma Houston UNC School of Government www.sog.unc.edu Page 19

Gift Ban Rule of Thumb

When In Doubt, Do Without!

• 1. Yes
• 2. No

Free Lunch

Can a vendor who is not currently under contract with your unit take you to lunch?

• 1. Yes
• 2. No

Conference Reception

Can you eat and drink at a conference reception sponsored by a vendor under contract with your unit?

Norma Houston UNC School of Government www.sog.unc.edu Page 20

• 1. Yes
• 2. No

Employee Appreciation

Can you ask a vendor under contract with your unit to donate biscuits for an employee appreciation breakfast?

Happy Holidays

• A. Yes
• B. No

Can you enjoy the holiday basket goodies sent to your office by a vendor doing business with your department?

Retiring Member’s iPad

• A. Yes
• B. No

Can your county/city give a retiring commissioner/councilmember her government- issued iPad as a going-away present?

Norma Houston UNC School of Government www.sog.unc.edu Page 21

INSIDER TRADING

• 3. Insider Trading

Insider Trading

Misuse of Confidential Information G.S. 14-234.1

Use non-public information gained in official position Class 1 misdemeanor Pecuniary benefit to you or someone else

Norma Houston UNC School of Government www.sog.unc.edu Page 22

• 1. Yes
• 2. No

Neighbor Contractor

Can you tell your neighbor about a potential bidding opportunity with your unit?

SPECIAL RULES FOR GOVERNING BOARD MEMBERS Special Rules for Board Members

• 1. Ethics Training
• Within 12 months
• Of election or appointment
• And re-election or re-

appointment

• 2. Local Ethics Codes
• 3. Duty To Vote

Norma Houston UNC School of Government www.sog.unc.edu Page 23

Complying with Local Ethics Codes

No specific authority to sanction board members

What is Censure?

• Resolution expressing dissatisfaction with the

board member’s conduct

• Carries no legal sanctions

Duty to Vote

• City and County governing board

members have a statutory duty to vote

• NO statutory authority to abstain from

voting – members MUST be excused from voting by the board

• City Rule - If a member is present and

has not been excused from voting, yet fails to vote, the member will be counted as voting YES

• County Rule – No statutory “default

yes” but some have rule in local policy

Norma Houston UNC School of Government www.sog.unc.edu Page 24

New Limited Authority to Abstain

Effective 2015:

• A board member who is

present but does not vote on the repeal or amendment of a zoning

• rdinance is recorded

as abstaining and is not counted as voting “yes.”

• Still requires a majority
• f members not

excused to pass; 2/3 on first reading.

Legal Authority for Being Excused from Voting

Prohibited When:

• Zoning map or text

amendment in which member has a financial interest

• Quasi-judicial decisions in

which member has a fixed

• pinion, bias, financial

interest, or close personal relationship

• Public contracts from which

member or spouse derives a direct financial benefit

May Be Excused If:

• Matter before board

involves member’s own financial interest

• Matter before board

involves member’s official conduct

What about avoiding the appearance

• f impropriety?

Norma Houston UNC School of Government www.sog.unc.edu Page 25

What about avoiding the appearance

• f impropriety?

Unless there is a legal basis for abstaining or being excused, the member must vote - even if it seems unethical to do so BOARD MEMBER SCENARIOS WHAT DO YOU THINK?

RESOURCES

Norma Houston UNC School of Government www.sog.unc.edu Page 26

SOG Ethics Website Coates’ Canons Blog

www.canons.sog.unc.edu

Thanks for Being an Ethical Clerk!

Norma Houston nhouston@sog.unc.edu 919.843.8930

Norma Houston UNC School of Government www.sog.unc.edu Page 27